Self employed: do I still need to pay my National Insurance?

Martin Copland
Martin Copland

Question from Mrs of Bexhill

I have been self-employed for a number of years and have paid Class 2 National Insurance throughout the year in previous years.

I have not received a bill for Class 2 National Insurance in the last year or so.

Do I still need to pay it?

Answer:

As a self-employed individual, you may have to pay Class 2 and Class 4 National Insurance on the profits you make.

For the 2015/16 and 2016/17 tax years, you will need to pay Class 2 National Insurance if your profits are over £5,965 in the year and Class 4 National Insurance if your profits are above £8,060.

If you do need to pay Class 2 National Insurance you have to pay £2.80 per week, which is a slight increase on the 2014/15 figure.

This is no longer paid throughout the year as it has been for many years. It is now paid at the end of the year on your self-assessment tax return.

Therefore, if you traded for the whole of the 2015/16 tax year, you would need to pay £145.60 together with any Income Tax and Class 4 National Insurance which is due by 31 January 2017.

The percentage of Class 4 National Insurance charged has not changed.

If your profits are between £8,060 and £42,385, you will need to pay 9% on your profit made.

If your profits are above £42,385, you have to pay 2% on any profitabove this level.

In the budget in March 2016, the Chancellor announced that Class 2 National Insurance will be abolished from 6 April 2018.

Therefore you will only need to pay Class 2 National Insurance on profits made in the years to 5 April 2016, 5 April 2017 and 5 April 2018.

If you are unsure and would like to discuss your circumstances in greater detail, Ashdown Hurrey can advise on personal tax matters in addition to other tax, accountancy and business matters.

Contact Martin Copland on 01424 720222.

Alternatively email Martin at martinc@ashdownhurrey.co.uk.

Ashdown Hurrey has been providing accountancy, audit, tax and financial advice to individuals, businesses and charities since the early 1980s.

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